17/08/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 17 August

Eric Mindich’s $13bn Eton Park Capital Management led hedge funds in raising gold investments last quarter, joining billionaire John Paulson’s bet that bullion will increase amid inflation concerns, reports Bloomberg. Eton Park bought 6.58 million shares of SPDR Gold Shares, an exchange-traded fund that tracks the price of bullion, in the second quarter, according to a regulatory filing yesterday. The investment was valued at $800.3m as of June 30, making it the hedge fund’s biggest holding. Leon Cooperman and Dmitri Balyasny also added shares of the gold fund, while George Soros and David Einhorn acquired shares in mining companies. Gold futures have gained 39% since the start of 2009 and reached a record on June 21. 

Gartmore reported a 15% decline in assets under management on Tuesday as investors pulled cash and fund performance sank in the May and June stock sell-off, the Wall Street Journal reports. The UK fund manager, which hit the headlines in spring for suspending one of its top portfolio managers, Guillaume Rambourg, who later left the company, said assets under management slipped to £19.9bn at 30 June, from £23.5bn at the end of March and £22.2bn at the end of 2009. Better performance in July helped lift the figure back up to £20.3bn at 31 July, the company said, though it has continued to register net investor outflows and more redemption requests have been submitted for September. Chief executive officer Jeff Meyer said net sales were below expectations and were mainly due to the Rambourg suspension, which had made investors wary of investing in Gartmore funds. 

Cheyne Capital, one of London’s most prominent credit hedge funds, is poised to reorganise its listed vehicle Queen’s Walk Investment, an early victim of the global housing slump when it hit in 2007, according to the FT. Losses at the fund, which specialised in investing in complex mortgage assets, presaged the collapse of Northern Rock and the spread of problems in the US subprime housing market into the UK. In spite of a broad recovery across housing markets over the past 18 months, shares in Queen’s Walk have traded at a significant discount to the value of the fund’s actual assets, valued at more than €100m (£82m). Shares have been trading at as much as a 35% discount recently. 

Billionaire hedge fund manager Edward Lampert further trimmed stakes he owned in major US financial companies during the second quarter, a securities filing showed on Monday, reports Reuters. As of 30 June, Lampert's ESL Investments' RBS Partners fund reduced the stakes it owned in Capital One Financial Corp, Citigroup and CIT Group, the filing showed, compared with holdings on 31 March. The filings also showed no holdings in two financial companies in which RBS previously listed stakes – Wells Fargo & Co and student lender SLM Corp. ESL tends to take concentrated positions in a few stocks and, in the first quarter, had already trimmed shares in Wells Fargo and Bank of America Corp. Lampert himself is best-known for putting together retailers Sears and Kmart five years ago. He remains chairman of Sears.

Parker Global Strategies’ index tracking the performance of foreign-exchange hedge funds reported positive returns in July after every major European currency strengthened against the US dollar, reports Bloomberg. The Parker FX Index returned 0.54% in July, compared with -0.05% during the past three months, according to a statement released today. The best-performing fund in the index returned 6.8% , while the worst returned minus 4.9%. The median return was 0.27%. “In July, currency markets were defined by a significant decline in the US dollar relative to most Group of 10 currencies,” the statement said. Positive news flow from Europe, and the US’s weaker-than-expected 2.4% second quarter growth bolstered investors’ demand for higher-yielding assets. 

Viking Global Investors, the hedge fund co-founded by Andreas Halvorsen, sold its stake in Visa in the second quarter, its biggest holding in the prior period, Bloomberg reports. Viking sold 9.71 million shares of San Francisco-based Visa valued at $884m as of 30 June, according to a document filed today with the US Securities and Exchange Commission (SEC). The New York-based fund also sold 21.9 million shares of North Carolina-based Bank of America Corp., the nation’s largest US lender by assets. Visa and New York-based rival MasterCard may be hurt next year when the Federal Reserve imposes new debit- card regulations. Viking sold MasterCard in the first quarter, according to a previous SEC filing. Visa declined 17% this year; MasterCard fell 18%. 

Billionaire Nelson Peltz has disclosed that his hedge-fund group sold a $132m stake in Kraft Foods that it bought earlier this year, reports Bloomberg. Trian Fund Management’s investment funds held no Kraft shares as of 30 June, compared with 4.47 million shares on 31 March, according to filings with the SEC on Friday. The New York-based hedge-fund group had owned as many as 34.6 million Kraft shares at the end of 2008. Kraft, the second-largest food maker after Nestle SA, announced in November 2007 that it would add two board members backed by Peltz after he agreed not to seek control of the Northfield, Illinois-based company. 

Hedge fund manager Philip Falcone slimmed his stock portfolio by eliminating at least a dozen names and dramatically paring his top holding, a new regulatory filing shows, reveals Reuters. The New York-based hedge fund manager, who is staking his reputation on a big bet that he can build a high-speed wireless network, eliminated stocks like Clearwire Corp and Mercer International in his Harbinger Capital Partners Master Fund I. Falcone also pared back Citigroup which had been his biggest holding with 70 million shares in the first quarter, and cut telecommunications company Sprint Nextel. At the end of the second quarter, the filing shows that he owned only 35 million shares of Citi, which has been remaking itself since being rescued with $45bn in government bailout money. 

The value of billionaire investor George Soros's hedge fund dropped by 42% to $5.1bn at the end of the second quarter, as he cut back on positions in several blue-chip names during the period, according to a regulatory filing late Monday, reports the Dow Jones Newswire. Soros Fund Management also reported no stake in one of its recent largest holdings, Petroleo Brasileiro SA, according to a filing with the SEC. Soros had disclosed owning 9.1 million shares of the energy company in the first quarter. The fund also reduced its positions in AT&T and JP Morgan Chase & Co selling 4.1 million shares and 2.5 million shares of the companies, respectively. Soros's stake in AT&T is now valued at $12.2m, while JP Morgan is valued at $3.9m. 

LAUNCHES
Geneva-based hedge fund Jabre Capital Partners (Jab Cap) has launched a Luxembourg domiciled Ucits umbrella, JABCAP (LUX), with one sub-fund, JABCAP (LUX) - Global Balanced, which is expected to be the first in a series of Ucits funds. Carne Group, a business advisory group, will be assisting in the launch. “Carne is delighted to work with a firm as highly regarded as Jabre Capital, a leader in the global alternative investment management industry,” John Donohoe, chief executive officer of Carne. “We are experiencing great interest in what Ucits has to offer alternative mangers and investors.”

PEOPLE MOVES
Credit Suisse, the second- biggest Swiss bank by assets, has hired Lesley D. Goldwasser to oversee a new effort to offer capital-markets financing to hedge funds along with advice and services, reports Bloomberg. Goldwasser will start on 1 September and report to both Philip Vasan, head of prime services, and Tony Ehinger, co-head of global securities, according to Vasan. Goldwasser worked at Credit Suisse for 12 years and at Bear Stearns for 12 years, where she was co-head of strategic finance. She has been a partner at Irving Place Capital since 2008. The Hedge Fund Strategic Services division will be an umbrella over the account managers, capital services, and the hedge-fund advisory initiative already offered by Zurich-based Credit Suisse to funds. 

BlueCrest Capital Management has lined up a new head of sales and marketing for Europe and the US, reports Financial News. Bob Shea, who will become the fourth person to hold this role in the space of a year, will join the firm in October to head the sales and marketing team, according to a spokesman for the firm. He joins from UBS Global Asset Management, where he has spent the last five years as regional head of business development in its A&Q business, running teams in both Europe and the US. At 30 June, BlueCrest was the third largest hedge fund manager in Europe after growing assets 65% in the past 12 months to $20.5bn.